Paramount Resources Ltd. ("Paramount" or the "Company") is pleased to announce its second
quarter 2024 financial and operating results, highlighted by strong adjusted funds flow and well results at
Kaybob North that continue to demonstrate the high quality of the Company’s Duvernay position.
HIGHLIGHTS
- Second quarter sales volumes averaged 95,609 Boe/d (48% liquids). (1)
- Grande Prairie Region sales volumes averaged 63,480 Boe/d (51% liquids), consistent with
Paramount’s expectations. Sales volumes were restricted by planned maintenance outages
and some unplanned downtime at key facilities.
- Kaybob Region sales volumes increased to 23,946 Boe/d (41% liquids), driven by a new five
well Duvernay pad brought onstream at Kaybob North.
- Central Alberta and Other Region sales volumes averaged 8,183 Boe/d (49% liquids).
- The continued strong results from Paramount’s drilling program at Kaybob North and Willesden
Green grew the Company's total Duvernay production in the quarter to an average of
approximately 15,000 Boe/d (63% liquids).
- The Company shut-in a total of 4,600 Boe/d of dry gas production in the quarter due to low
natural gas prices.
- First half 2024 sales volumes averaged 98,293 Boe/d (48% liquids), in line with the midpoint of the
Company's guidance of 96,000 Boe/d to 100,000 Boe/d (47% liquids).
- Cash from operating activities was $221 million ($1.51 per basic share) in the second quarter.
Adjusted funds flow was $266 million ($1.82 per basic share). Free cash flow was $20 million ($0.14
per basic share). (2)
- Second quarter capital expenditures totaled $241 million. Significant activities included:
- Grande Prairie Region (Montney) – eleven (11.0 net) wells drilled, four (4.0 net) wells brought
on production and the substantial completion of a new compressor node at Wapiti that will
support the development of the western portion of the field;
- Kaybob Region (Duvernay) – five (5.0 net) wells drilled and five (5.0 net) wells brought on
production; and
- Central Alberta and Other Region (Duvernay) – four (4.0 net) wells drilled and the ongoing
construction of the Company's second operated natural gas processing plant at Willesden
Green.
- Asset retirement obligations settled in the second quarter totaled $2 million.
- As previously disclosed, Paramount sold 6 million shares of its investment in NuVista Energy Ltd. for
cash proceeds of $75 million in the second quarter. The carrying value of the Company's investments
in securities at June 30, 2024 was $580 million. Paramount received total cash dividends of $8 million
in the second quarter from its investments in securities.
- In June 2024, Paramount realized total cash proceeds of $38 million from the termination and close
out of all of its then outstanding NYMEX WTI swaps (14,250 Bbl/d at C$111.67/Bbl for the balance
of 2024). Paramount has since hedged 5,000 Bbl/d of liquids sales from July 2024 to the end of 2025
at an average WTI price of C$105.00/Bbl.
- Revenue in the second quarter included $10 million related to an initial payment from insurers for
2023 Alberta wildfire losses. The Company continues to advance its insurance claims process.
- At June 30, 2024, net debt was $29 million and Paramount’s $1.0 billion revolving credit facility was
undrawn. (1)
GUIDANCE
Paramount is reaffirming its 2024 guidance for sales volumes. The Company currently has approximately
4,600 Boe/d of dry gas production shut-in. The 2024 sales volumes guidance assumes that this production,
as well as certain new dry gas production, is brought online in the fourth quarter. If natural gas prices do
not improve later in the year, as anticipated, the Company may choose to defer bringing this production
online. In such a case, Paramount anticipates that 2024 sales volumes would be at the lower end of the
forecast range.
The Company is reaffirming its 2024 guidance for capital expenditures and abandonment and reclamation
expenditures.
Paramount is updating its forecast of 2024 free cash flow from $205 million to $100 million to reflect first
half results and revised natural gas price assumptions for the second half of 2024 of US$2.50/MMBtu
NYMEX and $1.50/GJ AECO (previously US$3.50/MMBtu NYMEX and $2.84/GJ AECO). Assumed WTI
pricing for the second half of 2024 remains unchanged at US$80.00/Bbl.
2024 Guidance
Annual average sales volumes (Boe/d) 100,000 to 106,000 (48% liquids)
Third quarter 2024 (Boe/d) 96,000 to 104,000 (49% liquids)
Fourth quarter 2024 (Boe/d) 109,000 to 121,000 (48% liquids)
Capital expenditures $830 to $890 million
Sustaining and Maintenance $415 to $445 million
Growth $415 to $445 million
Abandonment and reclamation expenditures $40 million
Free cash flow (1) $100 million
The Company’s midpoint 2024 sustaining and maintenance capital program, abandonment and reclamation
expenditures and regular monthly dividend would remain fully funded down to an average WTI price for the
second half of 2024 of about US$56/Bbl, assuming no changes to the other forecast assumptions.
AUGUST DIVIDEND
Paramount's Board of Directors has declared a cash dividend of $0.15 per class A common share that will
be payable on August 30, 2024 to shareholders of record on August 15, 2024. The dividend will be
designated as an "eligible dividend" for Canadian income tax purposes.
REVIEW OF OPERATIONS
GRANDE PRAIRIE REGION
Second quarter 2024 sales volumes in the Grande Prairie Region were consistent with Paramount’s
expectations, averaging 63,480 Boe/d (51% liquids) compared to 67,163 Boe/d (50% liquids) in the first
quarter. Although field deliverability has been enhanced as a result of the previously disclosed well
optimization program, second quarter sales volumes were restricted by planned maintenance outages at
two third-party natural gas processing facilities. Sales volumes were further restricted by start-up issues
and unplanned downtime at one of these plants, which have since been largely resolved.
The well optimization program that was initiated in the first quarter is ongoing and has resulted in improved
deliverability. There are currently 11 wells that the Company believes could benefit from intervention in the
Grande Prairie Region. The magnitude of incremental contribution from these wells is expected to be less
as the Company focused on the highest impact wells first.
Development activities in the Grande Prairie Region in the second quarter included the drilling of eleven
(11.0 net) Montney wells, the completion of eleven (11.0 net) Montney wells and the bringing onstream of
four (4.0 net) Montney wells. The construction of a new compressor node in the western portion of the
Wapiti field was concluded and commissioned in July, approximately one month ahead of schedule. This
has allowed the Company to bring a new seven (7.0 net) well Montney pad on production earlier than
forecast. The pad has been brought on at restricted rates, initially through temporary equipment and more
recently through permanent facilities.
Paramount plans to drill a total of 16 (16.0 net) Montney wells and bring on production a total of 27 (27.0
net) Montney wells in the Grande Prairie Region in the second half of 2024. As previously disclosed, third
quarter sales volumes will be impacted by a planned 21-day full outage at the Wapiti natural gas processing
plant.
KAYBOB REGION
Kaybob Region sales volumes averaged 23,946 Boe/d (41% liquids) in the second quarter of 2024
compared to 22,353 Boe/d (42% liquids) in the first quarter. Sales volumes increased as a result of new
well production from a five (5.0 net) well Kaybob North Duvernay pad that came on production part way
through the second quarter. The shut-in of certain dry gas wells due to low natural gas prices partially
offset production contributions from this pad. In light of low natural gas pricing, Paramount shut-in 1,800
Boe/d of Kaybob Region dry gas production in the second quarter and does not expect to bring this
production back on until late 2024 when prices are forecast to improve.
Development activities in the second quarter included the drilling of five (5.0 net) Duvernay wells and the
completion and bringing on production of a five (5.0 net) well Duvernay pad at Kaybob North.
Initial production from the five well Duvernay pad brought onstream at Kaybob North in the second quarter
averaged gross 30-day peak production per well of 1,028 Boe/d (1.1 MMcf/d of shale gas and 853 Bbl/d of
NGLs) with an average CGR of 814 Bbl/MMcf. (1) The wells on this pad have been flowing at restricted
rates due to facility constraints.
Paramount plans to drill five (5.0 net) Duvernay wells and bring on production six (6.0 net) Duvernay wells
at Kaybob North in the second half of 2024.
CENTRAL ALBERTA AND OTHER REGION
Central Alberta and Other Region sales volumes averaged 8,183 Boe/d (49% liquids) in the second quarter
of 2024 compared to 11,461 Boe/d (44% liquids) in the first quarter. In the second quarter, the Company
shut-in approximately 2,800 Boe/d of dry gas production in northeast British Columbia due to low natural
gas prices.
Paramount finished the drilling of a new six (6.0 net) well Duvernay pad in Willesden Green in the second
quarter. The Company plans to complete and bring onstream three of these wells in the third quarter and
the remaining three wells in 2025 when sufficient processing capacity is expected to be available.
The construction of the Company's second operated natural gas processing plant in the Willesden Green
area is ongoing. Paramount continues to anticipate start-up of the plant in the fourth quarter of 2025.
The Company plans to drill five (5.0 net) Duvernay wells and bring on production three (3.0 net) Duvernay
wells at Willesden Green in the second half of 2024. Third quarter sales volumes will be impacted by the
planned shut-in of certain legacy wells on the Willesden Green Duvernay 04-07 pad for two weeks as
completion operations are conducted on three new wells on this pad. The Company capitalized on this
planned downtime by taking a 9-day full outage of the Company’s Leafland natural gas processing plant to
conduct preventative maintenance and minor repair work.
